Question

Multiple-Product Breakeven Instructions Sales Mix and Break-Even Quantity Instructions Cherry Blossom Products Inc. produces and sells yoga training products: how to DVDs and a basic equipment set (blocks, strap, and small pillows). Last year, Cherry Blossom Products sold 13,590 DVDs and 4,530 equipment sets. Information on the two products is as follows: Equipment Sets $24.80 DVDs $7.70 4.10 Price Variable cost per unit 15.00 Total foxed cost is $78,220 Required: 1. What is the sales mix of DVDs and equipment sets? 2. Compute the break-even quantity of each product.

Answer 1

DVDS Equipments Selling price Per unit Variable Cost Per unit Contribution Margin Per unit Sales Mix 3:1 CM* sales mix Weighted Average Unit Contribution Fixed cost 7.7 24.8 15 4.1 3.6 9.8 75% 25% 2.45 2.7 5.15 76220 Weighted Average Unit Contribution 5.15 Fixed Cost 76220 Compute the Break Even point in Units Break Even in Unit Sales ( Fixed Cost / CM Per unit)= 76220/14800 14800 (Units) Sales Mix 3:1 Break Even Quantitiy of Each Prodcut DVDS 11100 (14800*75%) 3700 (14800*25%) Equipments